A scorecard for pension plan sponsors

Sumit Kundu

By Sumit Kundu
Sumit Kundu is a director and pension consulting actuary for MassMutual’s Institutional Solutions unit.
Posted on Apr 30, 2018

Growing stock market volatility … rising interest rates … increasing Pension Benefit Guarantee Corp. (PBGC) premiums … longer lifespans for retirees. Managing pension risks has become decidedly more complex and difficult for employers that sponsor defined benefit (DB) plans. More than ever, CEOs and CFOs are eager to know what’s happening to their pension liabilities.

As the velocity of economic, regulatory and other changes intensifies, DB plan sponsors need all of the information and insights they can get. MassMutual, a provider of DB plans for more than 70 years, continues to ratchet up its support and help sponsors better manage their risks inherent in pension plans.

MassMutual’s latest enhancement is our new quarterly market update and commentary about economic and regulatory conditions and their impact on managing pension obligations. The MassMutual Defined Benefit Market Update and Commentary is designed to support its DB plan sponsors and potential clients in the ongoing management of their plans. Internally, we refer to the Update as the “pension scorecard” for plan sponsors.

The quarterly report includes data on interest rates and markets, both equity and bonds, and commentary on economic and regulatory matters to help sponsors make informed decisions. Movements in interest rates, regulatory changes in the pension space, and the performance of the asset markets have a deep impact on the risk and performance of pension plans. Plan sponsors are particularly concerned with issues that create volatility for their funded status and contribution requirements for funding their plans, which often spur questions from plan sponsors to our pension actuaries.

The tracking report is generated by MassMutual’s Defined Benefit actuarial and investment consultants with the goal of helping sponsors maintain an integrated actuarial and investment policy to manage their plan. MassMutual’s pension consultants then help plan sponsors to review their own data and examine implications on their individual plans.

So what can you expect to see in the new “pension scorecard”? The Update and Commentary is designed to be a quarterly snapshot of the economic environment and its implications for pension plans:

  • Providing updates of recent market returns and trends, movements in interest rates and the impact on pension funding rates and accounting discount rates;
  • Assessing the potential impact of the economy on pensions, including active, closed or frozen, and the impact of volatility on asset returns;
  • Reviewing specific plan’s current asset allocations in collaboration with the plan’s actuarial and investment consultants with the goal of reducing volatility on funding status;
  • Reporting recent movements in the pension accounting discount curve for both MassMutual’s own yield curve as well as the Citigroup Pension Discount Curve for sample pension plans; and
  • Tracking interest rate trends.

MassMutual is increasingly being approached by plan sponsors to offer more insight and assistance to better help manage pension plan obligations. Increasingly, plan sponsors are reviewing their options for managing pension risks. The quarterly market update and commentary is another tool to help them simplify their plan and accomplish their goals.

As you review the report and its findings, please reach out to a MassMutual representative for DB plans or drop us a note about what you think of it, whether it’s helpful or how we can improve it. We’ll view your input as our scorecard on how we’re performing.


Sumit Kundu is a director and pension consulting actuary for MassMutual’s Institutional Solutions unit.

The information provided is not written or intended as specific tax or legal advice. MassMutual, its subsidiaries, employees, and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own, and do not necessarily represent the views of Massachusetts Mutual Life Insurance Company.